Editorial: Sorting out power mess in the West

Wednesday, Dec. 20, 2000 | 9:42 a.m.

Energy Secretary Bill Richardson did the right thing last week when he ordered 75 Western power generators to provide electricity to California. Unless it received an emergency infusion of electricity, the Golden State's power system was in danger of a breakdown, something that could temporarily cripple California's economy. The situation in California, the first major state to initiate electric deregulation, has caused many to reconsider whether this was a wise choice. The second-guessing has increased lately, especially when the current fuel shortage is added in with skyrocketing electricity prices this summer in San Diego, the first city in California to dabble in deregulation.

So who is to blame for the current mess? Some consumer advocates and elected officials from California have accused electricity generators of price gouging. But as Gannett News Service reported last week, electricity generators say state government policies, which required utilities to buy much of their power off the spot market (rather than entering into stable, long-term contracts), have contributed to the problems. The companies also say price caps advocated by some officials would exacerbate the current shortage of power plants, which they say has also helped lead to higher prices.

There is some truth to the electricity generators' assertions, but the reality is government needs to take an active role at a time when a free market solution won't ease an impending crisis. Electricity is a commodity that states, regions and the nation can't take for granted. It is crucial then that all the bugs be worked out first before radically changing the way electric companies operate. That is one reason why it was encouraging earlier this year when Nevada Gov. Kenny Guinn opted to postpone electric deregulation, because he believed the state just wasn't ready yet. Guinn also acted responsibly in creating a commission to help devise an energy plan for the state. Nevada's own energy situation doesn't mirror that of California, but our neighbor's woes underscore that deregulation in and of itself won't work unless the market conditions are right.

Immediately junking the government's regulation of electric companies, oversight which has worked well decade after decade, wouldn't make sense. There has to be an orderly transition that ensures that genuine competition will flourish once regulation is lifted. Otherwise residential consumers and businesses, if there is no one to look out on their behalf, run the risk of being gouged.